Advanced Power Technology Reports Third Quarter 2003 Results.Business Editors BEND, Ore.--(BUSINESS WIRE)--Oct. 23, 2003 Advanced Power Technology, Inc. (Nasdaq:APTI APTI Association for Preservation Technology International APTI Air Pollution Training Institute ): Conference Call at 2:00 p.m. PDT PDT abbr. Pacific Daylight Time PDT Pacific Daylight Time PDT n abbr (US) (= Pacific Daylight Time) → hora de verano del Pacífico PDT , October October: see month. 23, 2003 -- Advanced Power Technology will conduct a conference call at 2:00 p.m. PDT, Thursday Thursday: see week. , October 23, 2003 webcast simultaneously for interested investors via the Company's corporate web site at www.advancedpower.com. The call can be accessed live by dialing 1-800-915-4836. International callers please dial 1-973-317-5319. The content of the call will remain available for replay on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the for 30 days. In addition, a telephone replay of the conference call will be available for 30 days and can be accessed at 1-800-428-6051 and from international locations at 1-973-709-2089; passcode 310068. Advanced Power Technology, Inc. (Nasdaq:APTI), a leading supplier of high performance power semiconductors used in the conditioning and control of electrical power for both switching and RF applications, today reported financial results for the third quarter ended September September: see month. 30, 2003. -- Revenues of $12.7 million, compared to $12.5 million in the second quarter of 2003 -- Net loss per share of $(0.03) for the quarter in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) -- Pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net income per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share of $0.02 for the quarter, excluding certain non-cash purchase accounting charges -- Gross margin on a GAAP basis of 32.0 percent -- Pro forma gross margin of 34.2 percent, excluding certain non-cash purchase accounting charges Revenues for the third quarter of 2003 were $12.7 million, compared to $13.1 million for the third quarter of 2002, and $12.5 million for the second quarter of 2003. The net loss for the third quarter of 2003 in accordance with GAAP was $338,000, or $(0.03) per share, and includes a non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. of $480,000 related to the valuation of the Company's net deferred tax asset. The third quarter 2003 net loss compares to the third quarter of 2002 net income of $64,000 or $0.01 per diluted share and a net loss in the second quarter of 2003 of $119,000 or $(0.01) per share. Pro forma net income for the third quarter of 2003 was $249,000 or $0.02 per diluted share, compared to a pro forma net income of $547,000 or $0.05 per diluted share in the year-ago quarter, and a pro forma net income of $72,000 or $0.01 per diluted share in the second quarter of 2003. Pro forma gross margin for the third quarter of 2003 was 34.2 percent of revenue unchanged from the year-ago quarter and compared to 37.7 percent in the prior quarter. Pro forma net income (loss) and pro forma gross margin, which differs from net income (loss) and gross margin in accordance with GAAP, exclude non-cash charges related to the acquisitions of GHz Technology, Inc. in January January: see month. 2002 and Microsemi RF Products, Inc. in May 2002 and a severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when charge associated with reduction of personnel, incurred in the first quarter of 2003. A reconciliation of pro forma and GAAP net income (loss) is included with the attached financial statements. Patrick Sireta, Chief Executive Officer commented, "The third quarter financial results were in line with our expectations and consistent with the guidance provided in our July July: see month. 29, 2003 earnings release. We had a strong quarter of design wins with 21 design wins in the third quarter. Our balance sheet remains strong with $18.2 million of cash and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has and essentially no debt." "Our book to bill ratio closed at 0.85 for the third quarter primarily due to timing delays experienced on several customer programs in our military and aerospace business. I am confident however that we are building significant momentum in the military and aerospace market and that this market will contribute significantly to our 2004 revenue growth. "Actions we have taken over the last several quarters including actions to reduce payroll payroll a list of employees, their salary rates, tax deductions, amounts paid, payroll tax, long service leave entitlements. expense, continuously improve manufacturing yields and efficiencies, and strictly control discretionary spending continue to contribute to our financial performance. We expect to further realize the benefit of these actions in 2004. The move to consolidate Consolidate To combine the assets, liabilities, and other financial items of two or more entities into one. Notes: This term is generally used in the context of consolidated financial statements. our Pennsylvania Pennsylvania (pĕnsəlvā`nyə), one of the Middle Atlantic states of the United States. It is bordered by New Jersey, across the Delaware River (E), Delaware (SE), Maryland (S), West Virginia (SW), Ohio (W), and Lake Erie and New York wafer fabrication Wafer Fabrication is a procedure composed of many repeated sequential processes to produce complete electrical or photonic circuits. Examples include production of radio frequency (RF) amplifiers, LEDs, optical computer components, and CPUs for computers. operations into our Bend, Oregon Bend is a city in Deschutes County, Oregon, United States. The name Bend was derived from "Farewell Bend," the designation used by early pioneers to refer to the location along the Deschutes River where the town eventually was platted, one of the few fordable points along the facility continues to progress on plan and is targeted for completion by the second quarter 2004," commented Mr. Sireta. Business Outlook The following statements are based on current expectations. These statements are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. , subject to risks and uncertainties, and actual results may differ materially. These statements do not include the potential impact of any investments outside the ordinary course of business, or mergers or acquisitions that may be completed after October 23, 2003. Readers are cautioned not to place undue reliance on these forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , which speak only as of the date of this press release. The inclusion of any statement in this release does not constitute a suggestion by the Company or any other person that the events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or described in such statements are material. The Company does not undertake to publicly update or revise these forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied in this release will not be realized. Revenues for the fourth quarter ending December December: see month. 31, 2003 are expected to be approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $11.5 million to $12.0 million. At the anticipated revenue level indicated above, pro forma gross margin for the fourth quarter of 2003 is expected to be in the 32 percent to 34 percent range. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. in the fourth quarter of 2003 are expected to be approximately 36 percent to 38 percent of revenues. These estimates are exclusive of non-cash purchase accounting charges associated with acquisitions and include approximately $300,000 of legal expenses associated with ongoing patent litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. . Interest income in the fourth quarter of 2003 is expected to be approximately $54,000. On a before tax basis, the non-cash purchase accounting charges associated with acquisitions for the fourth quarter of 2003 are expected to be $276,000 in cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold and $8,000 in SG&A expenses. Overall, the pro forma net earnings per share for the fourth quarter of 2003 are expected to be a loss of approximately $(0.05) to $(0.02) per share, which assumes no tax benefit from the loss. Mr. Sireta commented, "The outlook for the fourth quarter 2003 stems primarily from timing delays experienced on several customer programs in our military and aerospace business and the lingering lin·ger v. lin·gered, lin·ger·ing, lin·gers v.intr. 1. To be slow in leaving, especially out of reluctance; tarry. See Synonyms at stay1. 2. lack of strength in the semiconductor capital equipment market. However, looking beyond the quarter-to-quarter percent changes, we are very confident that we are on the right strategic course. I am encouraged by the momentum developing for 2004 on the revenue side as a result of the designs we have won, and on the cost side as a result of the actions we have taken." "We have now established that the actions taken so far have driven APT (Automatic Programmed Tools) A high-level programming language used to generate instructions for numerical control machines. 1. (language) APT - Automatically Programmed Tools. 2. (company) APT - Audio Processing Technology. to be profitable at an average $12.6 million quarterly revenue level over the last two quarters, generating approximately $230,000 of quarterly profit before tax, on a pro forma basis. "While our sales to the military and aerospace market are now planned to decrease sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen in the fourth quarter of 2003, we expect that the combination of new products we have introduced and designs we have won will cause our sales to that market to grow approximately 24 percent from 2003 to 2004. "In the semiconductor equipment market the lingering lack of strength seems to be affected in part by holiday shutdowns and by an unusually high tolerance for high capacity utilization Capacity Utilization measures the rate at which a firm makes use of their capital productive capacities, such as factories and machinery. Capacity Utilization generally rises when the economy is healthy and falls when demand softens. at wafer (1) A small, thin continuous-loop magnetic tape cartridge that has been used from time to time for data storage and specialized applications. (2) The base unit of chip making. It is a slice taken from a salami-like silicon crystal ingot up to 12" (300mm) in diameter. fabs. There appears to be an increasingly general agreement in the industry that this will create a reactionary ramp. We are prepared and ready for it. "Coming out of a solid quarter, we remain focused on executing all of our key new product and new design win programs, and on completing our consolidation programs in the first half of 2004. We believe that we are on track to meet our goal of operating approximately at our target pro forma financial model, from both a sales level and a profitability standpoint The Standpoint is a newspaper published in the British Virgin Islands. It was originally published under the name Pennysaver, largely as a shopping-coupon promotional newspaper, but since emerged as one of the most influential sources of journalism in the , at a five to seven quarter horizon, generating 11 percent net profit after tax on a quarterly revenue level of about $18 million," concluded Mr. Sireta. About Advanced Power Technology Advanced Power Technology is a leading supplier of high performance power semiconductors used in the conditioning and control of electrical power for both switching and RF applications. The Company's products are used in communications and data processing data processing or information processing, operations (e.g., handling, merging, sorting, and computing) performed upon data in accordance with strictly defined procedures, such as recording and summarizing the financial transactions of a , semiconductor capital equipment, industrial/medical, and military/aerospace markets. Important information about Advanced Power Technology, Inc., including press releases and SEC filings, are available at no charge through the Company's Web site at www.advancedpower.com. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement Except for historical information contained herein, the matters discussed in this news release are forward-looking statements made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. APT cautions that such statements are subject to a number of uncertainties, and actual results may differ materially. Factors that could affect the Company's actual results include the ability of subcontractors to meet their delivery commitments; unfavorable changes in industry and competitive conditions; the Company's mix of product shipments; the accuracy of customers forecasts; the effectiveness of the Company's efforts to control and reduce costs; the cost and liability associated with patent infringement patent infringement n. the manufacture and/or use of an invention or improvement for which someone else owns a patent issued by the government, without obtaining permission of the owner of the patent by contract, license or waiver. litigation; and other uncertainties disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). in the Company's S-1 filing with the Securities and Exchange Commission dated August 7, 2000, 2002 Form 10K filed on March 25, 2003 and other periodic filings made by the Company. The Company assumes no obligation to update the information in this release.
ADVANCED POWER TECHNOLOGY, INC
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Nine Months
Ended Sept. 30, Ended Sept. 30,
2003 2002 2003 2002
------- ------- ------- -------
Revenues, net $12,708 $13,052 $36,354 $31,985
Cost of goods sold 8,363 8,589 23,892 21,275
Amortization of technology rights &
other 278 555 842 1,512
------- ------- ------- -------
Total cost of goods sold 8,641 9,144 24,734 22,787
------- ------- ------- -------
Gross profit 4,067 3,908 11,620 9,198
------- ------- ------- -------
Operating expenses:
Research and development 550 1,019 2,051 3,000
Selling, general and administrative 3,672 3,335 11,306 8,868
In-process research and development
charges - - - 2,108
------- ------- ------- -------
Total operating expenses 4,222 4,354 13,357 13,976
------- ------- ------- -------
Loss from operations (155) (446) (1,737) (4,778)
Other income (expense), net:
Interest, net 56 98 164 479
Other, net 16 31 (118) 22
------- ------- ------- -------
Loss before income taxes (83) (317) (1,691) (4,277)
Provision (benefit) for income taxes 255 (381) (225) (1,231)
------- ------- ------- -------
Net income (loss) $ (338)$ 64 $(1,466)$(3,046)
======= ======= ======= =======
Net income (loss) per share:
Basic ($0.03)$ 0.01 ($0.14) ($0.30)
Diluted ($0.03)$ 0.01 ($0.14) ($0.30)
Weighted average number of shares used
in the computation of net income (loss)
per share:
Basic 10,413 10,381 10,406 10,199
Diluted 10,413 10,935 10,406 10,199
ADVANCED POWER TECHNOLOGY, INC
SUPPLEMENTAL PRO FORMA DISCLOSURES (1)
RECONCILIATION OF GAAP TO PRO FORMA NET INCOME (LOSS)
(In thousands, except per share amounts)
(Unaudited)
Three Months Nine Months
Ended Sept. 30, Ended Sept. 30,
2003 2002 2003 2002
------- ------- ------- -------
Reported GAAP net income (loss) $ (338) $ 64 $(1,466)$(3,046)
Purchase accounting adjustments related to
acquisitions:
Cost of sales:
Intangible asset amortization 269 270 808 609
Inventory fair value adjustment - 252 - 786
Deferred compensation amortization 9 33 34 117
Research and development expense:
Deferred compensation amortization - 12 - 48
Selling, general and administrative:
Deferred compensation amortization 11 36 42 130
Severance charge 240
In-process research and development
charges - - - 2,108
Tax effect of pro forma adjustments 298 (120) - (618)
-------------------------------
Pro forma net income (loss) $ 249 $ 547 $ (342)$ 134
======= ======= ======= =======
Pro forma net income (loss) per
share:
Basic $ 0.02 $ 0.05 ($0.03)$ 0.01
Diluted $ 0.02 $ 0.05 ($0.03)$ 0.01
Weighted average number of shares used in
the computation of pro forma net income
(loss) per share:
Basic 10,413 10,381 10,406 10,199
Diluted 11,012 10,935 10,406 10,825
(1) Supplemental pro-forma disclosures are not based on generally
accepted accounting principles (GAAP), but are provided to explain the
impact of certain significant items. In accordance with new SEC
regulation G, the Company believes that this disclosure is useful to
investors and creditors of the Company as it is a way to explain the
impact of certain accounting charges included in the Company's
operating results due to our recent acquisitions.
ADVANCED POWER TECHNOLOGY, INC
CONSOLIDATED BALANCE SHEETS
(In thousands)
Sept. 30, Dec. 31,
2003 2002
----------------------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 10,561 $ 6,708
Short term investments in available-for-sale
securities 6,590 10,452
Accounts receivable, net 8,082 6,899
Inventories, net 12,385 11,949
Prepaid and other current assets 2,461 2,521
---------- ---------
Total current assets 40,079 38,529
Property and equipment, net 10,093 10,617
Long term investments in available-for-sale
securities 1,000 2,000
Other assets 257 109
Intangible assets, net 9,080 9,887
Goodwill 15,570 15,806
---------- ---------
Total assets $ 76,079 $ 76,948
========== =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 3,651 $ 2,873
Accrued expenses 2,066 2,475
---------- ---------
Total current liabilities 5,717 5,348
Other long term liabilities 411 428
---------- ---------
Total liabilities 6,128 5,776
Stockholders' equity:
Common stock 105 105
Additional paid in capital 88,546 88,490
Treasury stock (1,700) (1,700)
Deferred stock compensation (50) (171)
Accumulated other comprehensive income 234 166
Accumulated deficit (17,184) (15,718)
---------- ---------
Total stockholders' equity 69,951 71,172
---------- ---------
Total liabilities and stockholders' equity $ 76,079 $ 76,948
========== =========
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